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Financial challenges ahead

GOSHEN — Orange County is facing challenges, said County Executive Steve Neuhaus at his inaugural state of the county address. And he’s looking for cooperation from legislators and the public to meet them.Number one is closing a $60 million budget gap to keep the county’s high bond rating. Not closing it will ultimately cost Orange County residents millions more for the same services, Neuhaus said. Neuhaus noted that he solicited the services of an independent financial advisor and an auditor who worked with the deputy supervisor to look closely at the numbers. They agreed that the county is facing a real challenge, and it was predictable. The county executive credits unrealistic sales tax projections in the past as one budget downfall.“You can’t pay employees on sales tax that has dried up,” he said. :There’s no silver bullet solution. Difficult decisions have to be made.” Possibilities for the “drastic action” that he calls for to cut costs include raising taxes; lay-off of county employees; raising sales tax; searching for mandate relief; and transferring Valley View Center for Nursing Care and Rehabilitation to a Local Development Corporation (see main article). A viable partial-solution is to eliminate 200 county positions that are funded but not filled which could net a $10 million savings. Other actions include renegotiating contracts with vendors; offering early retirement incentives; reducing the number of capitol projects; and selling county-owned real property. On the positive side, economic development is gaining strength in the county with job opportunities on the rise. New businesses include Coach USA that is moving its national headquarters to Chester; Continental Organics; Crystal Run Healthcare; Kikkerfrosch Brewery; Amy’s Kitchen; Pratt and Whitney aerospace, and the Hoboken Film Festival in Middletown.Other county pluses since Neuhaus took office include crime and drug reduction. Neuhaus credits Orange County Sheriff Carl DuBois and District Attorney David Hoovler for reducing crime and drug rates in the county. In addition, the Department of Motor Vehicles is moving back to Goshen; around the clock emergency room service is once more available at Cornwall Hospital; the creation of a new labor board for policy recommendations, solving disputes, and ensuring workers on county projects are from the local area; and restarting the project at Camp LaGuardia and safeguard that it’s done legally and properly. By Geri Corey

By Edie Johnson

GOSHEN — The new county executive presented a stark choice: lay-off county workers, or sell the nursing home.

"It will be up to the legislature to decide which of these to choose," said Steve Neuhaus in his first state of the county address on Tuesday. "But raiding the fund balance will not be an option."

The auditorium of the county's emergency services building ran out of standing room Tuesday as residents poured in to hear Neuhaus talk about spending cuts in light of the county's drop last week from Aaa to Aa2 in the Moody's bond rating.

But Neuhaus is taking swift action this week to privatize Valley View nursing home, sweeping aside the many reassurances he's given to its supporters — from his repeated promises not to close it, to his assertion that the legislature should take charge. He pushed this week to schedule an April 4 public hearing, at 2 p.m. at the emergency services center, on forming a Local Development Corporation (LDC). This is the first step counties take when selling their nursing homes.

Those who support the idea of selling the home say it's sure to appease Moody's, which re-evaluate the county's long-term plans. Neuhaus, looking rattled, kept comparing the county's finances to those of his household, and the hard choices he and his wife had to make to get through lean times. (See related article.)

Nursing home as 'scapegoat'But the relentless focus on the nursing home, and the rush to get it off the county's hands, has perplexed those who point to its significant cost reductions over the past year.

"I’m tired of the management and the workers of Valley View being scapegoated for all of the county’s problems," said Legislator Mike Anagnostakis of Montgomery (R-District 17), a member of the Health and Mental Health Services Committee, in a statement to The Chronicle. "Valley View is the only department in the county that has decreased its cost to the taxpayers these last three years — the only department! In addition, Valley View has used less than 8 percent of the $183 million of reserves used to balance county budgets during the last four years. If every department had done a fraction of the reductions done at Valley View, we wouldn’t have any financial problems in this county."

Anagnostakis also led, with Democrat Roxanne Donnery, a 2012 bipartisan investigation into the finances and management of Valley View. The investigation found that the former administrator, Orange Administrative Services, was driving the nursing home into the ground.

Valley View is a beloved institution in Orange County, providing seniors with affordable care right in their own community. Some seniors have told The Chronicle they fear losing touch with loved ones at Valley View if they are moved to nursing homes 50 or more miles away. A nursing home not controlled by the county may choose to close without residents having a say in the matter.

Legislators: Why the rush?

Anagnostakis accused Neuhaus of bypassing the Health and Mental Health Services Committee to set up the hearing on the LDC.

Neuhaus introduced the idea before the rating drop, and called the outraged response of Democrats "partisan attacks." But now a fellow Republican, who had given Neuhaus the benefit of the doubt, is also blasting him for taking short-cuts that violate the legislative process. Legislators were told they could vote on whether to hold a public hearing on the LDC proposal.

"Bypassing this committee, providing no information to its chairman, and then, at the last moment because of media attention, 'allowing' this committee to be part of a joint meeting is just plain unacceptable," Anagnostakis stated. "This committee and its members know more about the day-to-day operations of Valley View than does any other committee. This committee and its members know more about the finances of Valley View than does any other committee. This committee will cast any votes on any policy issue involving Valley View only after conducting a thorough discussion and review of any requests brought before this committee in an appropriate fashion.

I will not allow this committee to participate in any mockery of the legislative process."

Majority leader Melissa Bonacic of New Hampton (R-District 2) said there was no intention to bypass the health committee, and that it was simply an issue of "timing."

Several legislators said the process seemed rushed. Roseanne Sullivan of Circleville (D-District 18), said the "timing" was "underhanded," and that it would take a lot to rebuild her trust in the new administration. Legislator Chris Eachus of New Windsor (D-District 15) said he was confused and still had not been told anything other than "something is going on about an LDC."

Legislator Shannon Wong (D-District 21) of Goshen said, “Selling Valley View isn’t going to solve our problem. Valley View is going in the right direction — costs are down and revenue is up.”

She said she's not comfortable with the choice of laying-off hundreds or selling Valley View, and that the Democratic Caucus is working on other ways to reduce costs, such as in the consolidation of services.

“We need to all work together to get out of the hole, and I believe we can do that," she said.

The pros and cons of LDCs

At Wednesday's meeting of the Health and Mental Health Committee, Valley View Administrator Laurence LaDue gave a positive report on Valley View, including an occupancy rate over 95 percent, expected new federal funding of nearly $1 million, and improved rehabilitation and case mix numbers that would save several million more. Anagnostakis lamented that plans for a sale were charging ahead after an intense investigation, corrective measures, and a year of improvements at Valley View — without lawmakers understanding its current financial health or the downside of forming an LDC. He invited the rest of the legislature to sit in on a committee session in which state comptroller Thomas DiNapoli could answer questions about LDCs. DiNapoli has said a number of LDCs — which are not obligated to participate in competitive bidding or comply with public procurement laws — are operating improperly or embroiled in lawsuits.

Several legislators on the Rules Committee, which set the public hearing, said they felt the LDC option should at least be considered. But they expressed fear of losing control over any sale.

Shawn Griffin of Harris Beech described to the committee how a Local Development Corporation functions. It will take only a simple majority of 11 votes, of 21 legislators, to agree to form an LDC, rather than the usual supermajority vote of 14 required for a sale. And while the legislature can attach conditions on how the LDC will operate, most counties have only a couple of legislators on the actual LDC board, and once it is formed the rest of the legislature would have nothing further to say. While meetings are subject to the usual "open meetings" laws, they also have the opportunity to meet in Executive Session if matters of personnel or monetary contracts are being discussed. The legislature would in fact "sell" the facility to the LDC, and the county would become a tenant rather than an owner.

It is possible, Griffin said, that the LDC will decide that it is more advantageous not to sell this facility, although this is the exception rather than the rule.

If an LDC is formed and a buyer found, the buyer would be required to interview existing employees first. Anyone left out would have to be given 60 days' notice.

No existing beds would be removed or patients asked to leave. The adjacent property, which is also worth millions, could be separated from main property and kept by the county or sold separately.

Griffin said counties form LDCs because votes by a legislature might change from session to session, making potential buyers wary.